The week started with an intervention by
Central Bank in the form of two OMOs during the week to suck the
excess liquidity from the system. The State Bank mopped up total
amount of Rs.16.60 billion to give stability to the market. In the
first OMO of the week, SBP accepted around Rs. 5.10 billion in one and
four weeks at 1.09% and 1.15%, but in the second OMO, SBP took the
market by surprise and accepted total amount of Rs. 11.50 billion in
one and two weeks at

much higher levels of
2.00% in each tenor. Even these OMOs could not affect the market trend
as market was still very liquid and flooded with the excess liquidity
and activity remained at the shallow levels till the end of the week.
Initially one week funds were traded at the record low level of 0.15%,
but as the week progressed an upward movement was witnessed, as it
gives the opportunity to cross over the quarter end and as banks
prefer to cover their positions in one week due to which deals were
executed around 1.50%. This week one month saw a major activity and
initially was traded around 1.15% and finally touched the level of
1.60%. Long term market was rather quiet this week. However, borrowing
interest in three and six months was quoted at 1.45% and 1.60% as
against the offers of 1.55% and 1.75%. The secondary market for T-Bill
was rather quiet during the past week. Quotes for latest six months
issue of 4th March, 2004 were present in the band of 1.68% and 1.64%
but no significant trades were reported. Bond market continued to
remain active throughout the week where PIB 10 year issue of 18th
June, 2002 was traded at 6.38% in ready. However, three months forward
deals for the same issue were dealt at 6.53% and 6.52%. PIB 10 year
issue of 6th October, 2003 was traded at 6.41% after the coupon but
closed with bids quoted at 6.40% against offers at 6.36% in ready.